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EXHIBIT 10.1
$46,000,000
CONTINUCARE CORPORATION
(a Florida corporation)
8% Convertible Subordinated Notes Due 2002
PLACEMENT AGREEMENT
October 27, 1997
Loewenbaum & Co. Incorporated
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Ladies and Gentlemen:
Continucare Corporation, a Florida corporation (the "Company"),
confirms its agreement with Loewenbaum & Co. Incorporated (the "Placement
Agent") with respect to the issuance and sale by the Company of up to
$46,000,000 aggregate principal amount of the Company's 8% Convertible
Subordinated Notes due 2002 (the "Notes"). The Placement Agent will be
responsible for soliciting purchasers of the Notes, as agent for the Company
and not as principal, in connection with the offering contemplated by this
Agreement. The Notes will be convertible at the option of the holder thereof
at any time after 60 days following the date of original issuance of the Notes
(the "Issue Date") and prior to maturity, unless previously redeemed, into
shares of the Company's common stock, par value $.0001 (the "Common Stock"), at
a conversion price of $7.25 per share, subject to adjustment in certain events.
The Notes and the Common Stock issuable upon conversion thereof are hereinafter
referred to as the "Securities." The Notes are to be issued pursuant to an
indenture to be dated as of October 30, 1997 (the "Indenture") between the
Company and American Stock Transfer & Trust Company, a New York corporation, as
trustee (the "Trustee"). Notes issued in book-entry form will be issued to
Cede & Co. as nominee of The Depository Trust Company ("DTC") pursuant to a
letter agreement, to be dated as of the Closing Time (as defined in Section
2(c)) (the "DTC Agreement"), among the Company, the Trustee and DTC.
Capitalized terms used herein and not otherwise defined shall have the meaning
assigned to them in the Indenture.
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The Notes are to be offered and sold by the Company without being
registered under the Securities Act of 1933, as amended (the "1933 Act"), in
reliance upon exemptions therefrom. Pursuant to the terms of the Securities
and the Indenture, investors that acquire Securities may only resell or
otherwise transfer such Securities pursuant to an effective registration
statement under the 1933 Act or pursuant to an exemption from (or in a
transaction not subject to) the registration requirements of the 1933 Act,
including the exemption afforded by Rule 144A ("Rule 144A") of the rules and
regulations promulgated under the 1933 Act by the Securities and Exchange
Commission (the "Commission").
The Company has prepared and delivered to the Placement Agent copies
of a preliminary offering memorandum dated October 6, 1997 (the "Preliminary
Offering Memorandum") and has prepared and will deliver to the Placement Agent,
on the date hereof or the next succeeding day, copies of a final offering
memorandum dated October 27, 1997 (the "Final Offering Memorandum"), each for
use by the Placement Agent in connection with its solicitation of purchases of
the Securities. "Offering Memorandum" means, with respect to any date or time
referred to in this Agreement, the most recent offering memorandum (whether the
Preliminary Offering Memorandum or the Final Offering Memorandum, or any
amendment or supplement to either such document), including exhibits thereto
and any documents incorporated therein by reference, which has been prepared
and delivered by the Company to the Placement Agent in connection with its
solicitation of purchases of the Securities.
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Offering Memorandum (or other references of like import) shall be deemed to
mean and include all such financial statements and schedules and other
information which are incorporated by reference in the Offering Memorandum; and
all references in this Agreement to amendments or supplements to the Offering
Memorandum shall be deemed to mean and include the filing of any document under
the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by
reference in the Offering Memorandum.
The Purchasers (as defined herein) of the Securities will be entitled
to the benefits of a registration rights agreement, to be dated October 30,
1997, between the Company and the Placement Agent (the "Registration Rights
Agreement") the form of which is attached hereto as Exhibit A.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to the Placement Agent as of the date hereof and as of
each Closing Time referred to in Section 2(c) hereof, and agrees with the
Placement Agent as follows:
(i) Similar Offerings. The Company has not,
directly or indirectly, solicited any offer to buy or offered to sell,
and will not, directly or indirectly, solicit any offer to buy or
offer to sell, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale
of the Securities in a manner that would require the Securities to be
registered under the 1933 Act; provided,
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however, that no such representation is made on behalf of the
Placement Agent or any person acting on its behalf.
(ii) Offering Memorandum. The Offering Memorandum
does not, and at such Closing Time will not, include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided
that this representation, warranty and agreement shall not apply to
statements in or omissions from the Offering Memorandum made in
reliance upon and in conformity with information relating to the
Placement Agent furnished to the Company in writing by the Placement
Agent expressly for use in the Offering Memorandum.
(iii) Incorporated Documents. The Offering
Memorandum as delivered from time to time shall incorporate by
reference the most recent Annual Report of the Company on Form 10-KSB
filed with the Commission and each Quarterly Report of the Company on
Form 10-QSB and each Current Report of the Company on Form 8-K filed
with the Commission since the end of the fiscal year to which such
Annual Report relates. The documents incorporated or deemed to be
incorporated by reference in the Offering Memorandum at the time they
were or hereafter are filed with the Commission complied and will
comply in all material respects with the requirements of the 1934 Act
and the rules and regulations of the Commission thereunder (the "1934
Act Regulations"), and, when read together with the other information
in the Offering Memorandum, at the date of the Offering Memorandum and
at such Closing Time, do not and will not include an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(iv) Independent Accountants. To the Company's
knowledge, the accountants who certified the financial statements and
supporting schedules included in the Offering Memorandum are
independent certified public accountants with respect to the Company
and its subsidiaries within the meaning of Regulation S-X under the
1933 Act.
(v) Financial Statements. The historical
financial statements, together with the related schedules and notes,
included in the Offering Memorandum present fairly in all material
respects the financial position of the Company and its consolidated
subsidiaries at the dates indicated and the statement of operations,
stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved except as disclosed therein. The
supporting schedules, if any, included in the Offering Memorandum
present fairly in accordance with GAAP the information required to be
stated therein. The selected financial data and the summary financial
information included in the Offering Memorandum present fairly in all
material respects the information shown therein and have been compiled
on a basis consistent with that of the audited financial statements
included in the Offering Memorandum. The pro forma
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financial statements of the Company and its subsidiaries and the
related notes thereto included in the Offering Memorandum present
fairly in all material respects the information shown therein, have
been prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in
the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(vi) No Material Adverse Change in Business.
Since the respective dates as of which information is given in the
Offering Memorandum, except as otherwise stated therein, (A) there has
been no material adverse change or development involving, or which
would reasonably be expected to involve, a prospective material
adverse change, in the business prospects of the Company as described
in the Offering Memorandum or in the condition, financial or
otherwise, earnings or business affairs of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, (B) there have been no transactions
entered into by the Company or any of its subsidiaries which are
material with respect to the Company and its subsidiaries considered
as one enterprise and (C) there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock nor has there been any material increase in the
short-term debt or long-term debt of the Company.
(vii) Good Standing of the Company. The Company
has been duly organized and is validly existing as a corporation in
good standing under the laws of the State of Florida and has corporate
power and authority to own, lease and operate its properties and to
conduct its business as presently conducted and as described in the
Offering Memorandum and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not (1) have a material adverse effect on the business
prospects of the Company as described in the Offering Memorandum or on
the condition, financial or otherwise, earnings, business affairs,
properties, shareholders' equity or results of operations of the
Company and its consolidated subsidiaries, considered as a whole, (2)
adversely affect in any significant way the issuance, validity or
enforceability of the Securities or the enforceability of the
Indenture or (3) adversely affect in any significant way the
consummation of any of the transactions contemplated by this
Agreement, the Indenture or the Registration Rights Agreement (each of
(1), (2) and (3) above, a "Material Adverse Effect").
(viii) Good Standing of Designated Subsidiaries.
Each subsidiary of the Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business
as described in the Offering Memorandum and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is
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required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in or have a Material Adverse
Effect; except as otherwise disclosed in the Offering Memorandum, all
of the issued and outstanding capital stock of each subsidiary of the
Company has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any of the Company's subsidiaries were
issued in violation of any preemptive or similar rights arising by
operation of law, or under the charter or by-laws of any such
subsidiary or under any agreement to which the Company or any such
subsidiary is a party.
(ix) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Offering Memorandum in the section entitled "Capitalization."
(x) Authorization of Agreement. This Agreement
has been duly authorized, executed and delivered by the Company.
(xi) Authorization of the Indenture. The
Indenture has been duly authorized by the Company and, at the First
Closing Time (as defined in Section 2(b) hereof), will have been duly
executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(xii) Authorization of the Registration Rights
Agreement. The Registration Rights Agreement has been duly authorized
by the Company and, at the First Closing Time, will have been duly
executed and delivered by the Company and will constitute a valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms except to the extent enforcement thereof may
be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights
generally or (b) general principles of equity (regardless of whether
considered in a proceeding in equity or at law) and except to the
extent that rights to indemnity and contribution contained therein may
be limited by state and federal securities laws or the public policy
underlying such laws.
(xiii) Authorization of the Notes. The Notes have
been duly authorized and, at each Closing Time, will have been duly
executed by the Company and, when authenticated in the manner provided
for in the Indenture and delivered against payment of the purchase
price therefor will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating
to or affecting enforcement of creditors' rights
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generally, or by general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), and
will be in the form contemplated by, and entitled to the benefits of,
the Indenture.
(xiv) Convertibility of Notes. The Notes will be
convertible into Common Stock in accordance with the terms of the
Indenture; the shares of Common Stock issuable upon conversion of the
Notes have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly
issued, fully paid and nonassessable and will conform to the
description thereof contained in the Offering Memorandum.
(xv) Description of the Securities and the
Indenture. The Securities and the Indenture conform in all material
respects to the respective statements relating thereto contained in
the Offering Memorandum and will be in substantially the respective
forms previously delivered to the Placement Agent.
(xvi) Absence of Defaults and Conflicts. Neither
the Company nor any of its subsidiaries is in violation of its charter
or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which or any of
them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in or have a Material Adverse Effect; and the execution,
delivery and performance of this Agreement, the Registration Rights
Agreement, the Indenture and the Securities and any other agreement or
instrument entered into or issued or to be entered into or issued by
the Company in connection with the transactions contemplated hereby or
thereby or in the Offering Memorandum and the consummation of the
transactions contemplated herein and in the Offering Memorandum
(including the issuance and sale of the Securities and the use of the
proceeds from the sale of the Securities as described in the Offering
Memorandum under the caption "Use of Proceeds") and compliance by the
Company with its obligations hereunder have been duly authorized by
all necessary corporate action and do not and will not, whether with
or without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or a Repayment Event (as
defined below) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, any of the Agreements and
Instruments except for such conflicts, breaches or defaults or liens,
charges or encumbrances that, singly or in the aggregate, would not
result in or have a Material Adverse Effect, nor will such action
result in any violation of the provisions of the charter or by-laws of
the Company or any of its subsidiaries or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its subsidiaries or any of
their assets or properties, except for such violations that would not
result in or have a Material Adverse Effect. As used herein, a
"Repayment Event" means any event or condition which gives
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the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries.
(xvii) Absence of Labor Dispute. No labor dispute
with the employees of the Company or any of its subsidiaries exists
or, to the knowledge of the Company, is imminent, which would
reasonably be expected to result in or have a Material Adverse Effect.
(xviii) Compliance with Applicable Laws. The Company
and its subsidiaries are in compliance with, and conduct their
businesses in conformity with, all applicable federal, state, local
and foreign laws, rules and regulations of any court, governmental
agency or legislative body, except where noncompliance or
nonconformity would not result in or have a Material Adverse Effect.
(xix) Absence of Proceedings. Except as disclosed
in the Offering Memorandum, there is no action, suit, proceeding,
inquiry or investigation before or by any court or governmental agency
or body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened against or affecting the Company or any subsidiary
thereof which, if adversely determined, would reasonably be expected
to result in or have a Material Adverse Effect. The aggregate of all
pending legal or governmental proceedings to which the Company or any
subsidiary thereof is a party or of which any of their respective
property or assets is the subject which are not described in the
Offering Memorandum, including ordinary routine litigation incidental
to the business, would not reasonably be expected to result in or have
a Material Adverse Effect.
(xx) Possession of Intellectual Property. The
Company and its subsidiaries own or possess, or can acquire on
reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks, trade
names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them,
and neither the Company nor any of its subsidiaries has received any
notice or is otherwise aware of any infringement of or conflict with
asserted rights of others with respect to any Intellectual Property or
of any facts or circumstances which would render any Intellectual
Property invalid or inadequate to protect the interest of the Company
or any of its subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result in
or have a Material Adverse Effect.
(xxi) Accounting Controls. The Company maintains a
system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance
with management's general or specific authorization; (ii) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles
and to maintain accountability
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for assets; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xxii) No Impermissible Payments. Neither the
Company, any subsidiary of the Company nor, to the Company's
knowledge, any employee or agent of the Company or any subsidiary of
the Company has made any payment of funds of the Company or any
subsidiary of the Company or received or retained any funds in
violation of any law, rule or regulation, which payment, receipt or
retention of funds would reasonably be expected to result in or have a
Material Adverse Effect.
(xxiii) Absence of Further Requirements. No filing
with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by
the Company of its obligations hereunder, in connection with the
offering, issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this Agreement
(except as may be required in connection with the registration of the
Notes and the qualification of the Indenture pursuant to, and in
connection with the registration contemplated by, the Registration
Rights Agreement and except as may be required under state securities
laws).
(xxiv) Possession of Licenses and Permits. The
Company and its subsidiaries possess such permits, licenses,
approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary under
applicable law to conduct the business now operated by them; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure
so to comply would not, singly or in the aggregate, result in or have
a Material Adverse Effect; all of the Governmental Licenses are valid
and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to
be in full force and effect would not result in or have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in or have a Material Adverse Effect.
(xxv) Title to Property. The Company and its
subsidiaries have good and marketable title to all real property owned
by the Company and its subsidiaries and good title to all other
properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Offering Memorandum or (b) do not, singly or in the aggregate,
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company
or any of its subsidiaries; and all of the leases and subleases
material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any
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of its subsidiaries holds properties described in the Offering
Memorandum, are in full force and effect, and neither the Company nor
any of its subsidiaries has any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of the
Company or any of its subsidiaries under any of the leases or
subleases mentioned above, or affecting or questioning the rights of
the Company or any subsidiary thereof to the continued possession of
the leased or subleased premises under any such lease or sublease.
(xxvi) Tax Returns. The Company and its
subsidiaries have filed all federal, state, local and foreign tax
returns that are required to be filed or have duly requested
extensions thereof and have paid all taxes indicated to be due in such
returns; and adequate charges, accruals and reserves in accordance
with GAAP have been provided for in the financial statements referred
to in Section 1(a)(v) above in respect of all federal, state, local
and foreign taxes for all periods as to which the tax liability of the
Company or any of its subsidiaries has not been finally determined or
remains open to examination by applicable taxing authorities
(xxvii) Environmental Laws. Except as described in
the Offering Memorandum and except for such matters as would not,
singly or in the aggregate, result in or have a Material Adverse
Effect, (A) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, in each
case as currently in effect, relating to pollution or protection of
human health, the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating
to the release or threatened release of medical wastes, chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws"), (B) the Company and
its subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or, to
the Company's knowledge, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
subsidiaries and (D) there are no events or circumstances that would
reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any
of its subsidiaries relating to Hazardous Materials or Environmental
Laws.
(xxviii) Investment Company Act. The Company is not,
and upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as
described in the Offering Memorandum will not be, an
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"investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of
1940, as amended (the "1940 Act").
(xxix) Rule 144A Eligibility. The Securities are
eligible for resale pursuant to Rule 144A and will not be, at any
Closing Time, of the same class as securities listed on a national
securities exchange registered under Section 6 of the 1934 Act, or
quoted in a U.S. automated interdealer quotation system.
(xxx) No Registration Required. Subject to
compliance by the Placement Agent with the procedures set forth in
Section 6(a) hereof, it is not necessary in connection with the offer,
sale and delivery of the Securities to the Purchasers in the manner
contemplated by this Agreement and the Offering Memorandum to register
the Securities under the 1933 Act or to qualify the Indenture under
the Trust Indenture Act of 1939, as amended (the "1939 Act").
(xxxi) No General Solicitation. None of the
Company, its affiliates, as such term is defined in Rule 501(b) under
the 1933 Act ("Affiliates"), or any person acting on its or any of
their behalf (other than the Placement Agent or any person acting on
its behalf, as to whom the Company makes no representation) has
engaged or will engage, in connection with the offering of the
Securities, in any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the 1933 Act.
(xxxii) No Manipulation of the Securities. The
Company has not taken and will not take, directly or indirectly, any
action designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of any of the
Securities; provided, however, that no such representation is made
on behalf of the Placement Agent or any person acting on its behalf.
(xxxiii) No Medicare or Medicaid Recoupments. There
are no material Medicare or Medicaid recoupment or recoupments of any
third-party payor being sought, requested or claimed, or to the
Company's knowledge threatened, against the Company.
(xxxiv) PORTAL Eligibility. The Company has agreed
to permit the Securities to be designated PORTAL eligible securities,
will pay the requisite fees related thereto and has been advised by
the National Association of Securities Dealers, Inc. PORTAL Market
("PORTAL") that the Securities have been designated PORTAL eligible
securities in accordance with the rules and regulations of the
National Association of Securities Dealers, Inc.
(xxxv) Insurance. The Company and each of its
subsidiaries is insured against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it is
engaged.
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its subsidiaries delivered to the Placement Agent or
to counsel for the Placement Agent
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shall be deemed a representation and warranty by the Company to the Placement
Agent as to the matters covered thereby.
SECTION 2. Sale and Delivery to Purchasers; Closing.
(a) Placement. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Placement Agent agrees to use its best efforts, as agent of the Company and not
as principal, to solicit purchases by investors (which may include the
Placement Agent) (collectively, the "Purchasers") of up to $46,000,000
aggregate principal amount of the Notes. As compensation to the Placement Agent
for its acting as placement agent hereunder, the Company at each Closing Time
(as defined below) will pay to the Placement Agent a placement fee in an amount
equal to 4.5% of the aggregate gross proceeds of the Notes offered and sold
hereunder at such Closing Time.
(b) Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to such Purchasers as the Placement Agent
shall designate up to $46,000,000 aggregate principal amount of the Notes at a
purchase price set forth in Schedule A hereto. The Notes shall have the
financial terms indicated on Schedule A.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Notes shall be made at the office of Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by the Placement Agent and the Company, at
10:00 A.M. on the third business day after the date hereof and/or such other
time or times not later than ten business days after such date as shall be
agreed upon by the Placement Agent and the Company. It is understood and
agreed that there may be more than one date and time hereunder at which payment
for and delivery of Notes may take place (the first such time and date of
payment and delivery being herein called the "First Closing Time" and each such
time and date of payment and delivery being herein called a "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery
as directed by the Placement Agent of certificates, registered in such names as
the Placement Agent may designate in writing at least one business day before
such Closing Time. The certificates representing the Notes which are sold to
Qualified Institutional Buyers (as defined below) shall be registered in the
name of Cede & Co. pursuant to the DTC Agreement and shall be made available
for examination and packaging by the Placement Agent in the City of New York
not later than 10:00 A.M. on the last business day prior to the Closing Time.
(d) Denominations; Registration. Certificates for the Notes shall
be in such denominations ($1,000 or integral multiples thereof) and registered
in such names as the Placement Agent may request in writing at least one full
business day before such Closing Time.
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SECTION 3. Covenants of the Company. The Company covenants with
the Placement Agent as follows:
(a) Offering Memorandum. The Company, as promptly as possible,
will furnish to the Placement Agent, without charge, such number of copies of
the Preliminary Offering Memorandum, the Final Offering Memorandum and any
amendments and supplements thereto and documents incorporated by reference
therein as the Placement Agent may reasonably request.
(b) Notice and Effect of Material Events. The Company will
immediately notify the Placement Agent and, if requested by the Placement
Agent, will confirm such notice in writing, of (x) any filing made by the
Company of information relating to the offering of the Securities with any
securities exchange or any other regulatory body in the United States or any
other jurisdiction, and (y) prior to the completion of the placement of the
Securities by the Placement Agent as evidenced by a notice in writing from the
Placement Agent to the Company, any material changes in or affecting the
business prospects of the Company as described in the Offering Memorandum or
the earnings or business affairs of the Company and its subsidiaries taken as a
whole which (i) make any statement in the Offering Memorandum false or
misleading or (ii) are not disclosed in the Offering Memorandum. In such event
or if during such time any event shall occur as a result of which it is
necessary, in the reasonable opinion of the Company, its counsel, the Placement
Agent or counsel for the Placement Agent, to amend or supplement the Final
Offering Memorandum in order that the Final Offering Memorandum not include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances then existing, the Company will forthwith amend or supplement the
Final Offering Memorandum by preparing and furnishing to the Placement Agent an
amendment or amendments of, or a supplement or supplements to, the Final
Offering Memorandum (in form and substance satisfactory in the reasonable
opinion of counsel for the Placement Agent) so that, as so amended or
supplemented, the Final Offering Memorandum will not include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
existing at the time it is delivered to the Placement Agent, not misleading.
(c) Amendment to Offering Memorandum and Supplements. The Company
will advise the Placement Agent promptly of any proposal to amend or supplement
the Offering Memorandum and will not effect such amendment or supplement
without the consent of the Placement Agent. Neither the consent of the
Placement Agent, nor the Placement Agent's delivery of any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 5 hereof.
(d) Qualification of Securities for Offer and Sale. The Company
will use its best efforts, in cooperation with the Placement Agent, to qualify
the Securities for offering and sale under the applicable securities laws of
such jurisdictions as the Placement Agent may designate and will maintain such
qualifications in effect as long as required for the sale of the Securities;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so
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qualified or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(e) DTC. The Company will cooperate with the Placement Agent and
use its best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(f) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Notes substantially in the manner specified
in the Offering Memorandum under "Use of Proceeds."
(g) Restriction on Sale of Securities. During a period of 180
days from the date of the Offering Memorandum, the Company will not, directly
or indirectly, (i) issue, sell, offer or agree to sell, grant any option for
the sale of, or otherwise dispose of, any securities that are substantially
similar to the Notes or Common Stock issuable upon the conversion thereof or
that are convertible into or exchangeable for, or otherwise represent a right
to acquire, any such securities, except pursuant to this Agreement or with
prior written consent of the Placement Agent, or (ii) enter into any swap or
any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequences of ownership of Securities,
whether any such swap transaction is to be settled by delivery of Securities or
such other securities, in cash or otherwise; provided, however, that the
Company may, without such consent, (i) issue Common Stock in connection with
acquisitions so long as the recipients thereof agree to be bound in writing to
a "lock-up" agreement for the remainder of such 180 day period, which agreement
shall be substantively identical to the letter agreement referred to in Section
5(f) hereof, (ii) issue shares of Common Stock pursuant to presently
outstanding employee stock options described in the Offering Memorandum and
(iii) grant options to purchase up to 700,000 shares of Common Stock pursuant
to the Company's Stock Option Plan so long as the recipients thereof who are
officers and directors of the Company agree to be bound in writing to a
"lock-up" agreement for the remainder of such 180 day period, which agreement
shall be substantively identical to the letter agreement referred to in Section
5(f) hereof. In addition, the Company will not waive, amend, supplement or
otherwise modify the agreements of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ referred
to in Note (7) to the table under the caption "Principal Shareholders" in the
Offering Memorandum, without the prior written consent of the Placement Agent.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the Offering Memorandum (including
financial statements and any schedules or exhibits and any document
incorporated therein by reference) and of each amendment or supplement thereto,
(ii) the preparation, printing and delivery to the Placement Agent of this
Agreement, the Registration Rights Agreement, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale
and delivery of the Securities, (iii) the preparation, issuance and delivery of
the certificates for the Securities, including any charges of DTC in connection
therewith; (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with
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the provisions of Section 3(d) hereof, including filing fees and the reasonable
fees and disbursements of counsel for the Placement Agent in connection
therewith and in connection with the preparation of any blue sky survey, any
supplement thereto and any legal investment survey, (vi) the fees and expenses
of the Trustee, including the fees and disbursements of counsel for the Trustee
in connection with the Indenture and the Securities and (vii) any fees payable
to the review by the National Association of Securities Dealers, Inc. (the
"NASD") in connection with the initial and continued designation of the
Securities as PORTAL securities under the PORTAL Market rules. In addition,
except as otherwise provided in Section 4(b), the Company will reimburse the
Placement Agent for $62,000 (approximately $27,000 of which has been paid) in
out-of-pocket expenses incurred by the Placement Agent in connection with the
transactions contemplated hereby.
(b) Termination of Agreement. If this Agreement is terminated by the
Placement Agent in accordance with the provisions of Section 5 (other than
solely by reason of the failure to satisfy the condition set forth in Section
5(b)) or Section 10(a)(i) hereof, the Company shall reimburse the Placement
Agent for all of its out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Placement Agent.
SECTION 5. Conditions to Closing. The closing of the offer and
sale of the Securities hereunder is subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Opinion of Counsel for Company. At each Closing
Time, the Placement Agent shall have received the favorable opinion,
dated as of such Closing Time, of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.A., and/or other counsel for the Company reasonably
acceptable to the Placement Agent, in form and substance satisfactory
to counsel for the Placement Agent, together with signed or reproduced
copies thereof as counsel to the Placement Agent may reasonably
request, to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the Placement Agent may reasonably
request.
(b) Opinion of Counsel for Placement Agent. At each
Closing Time, the Placement Agent shall have received the favorable
opinion, dated as of such Closing Time, of ▇▇▇▇▇▇▇, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel for the Placement Agent, with respect to
the matters set forth in (vi) through (x), inclusive, (xiii) (solely
as to the information in the Offering Memorandum under "Description of
Notes") and the penultimate paragraph of Exhibit B hereto. In giving
such opinion such counsel may rely, as to all matters governed by the
laws of jurisdictions other than the law of the State of New York and
the federal law of the United States, upon the opinions of counsel
satisfactory to the Placement Agent. Such counsel may also state
that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers
of the Company and its subsidiaries and certificates of public
officials.
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(c) Officers' Certificate. At each Closing Time, there
shall not have been, since the date hereof or since the respective
dates as of which information is given in the Offering Memorandum, any
material adverse change in the business prospects of the Company as
described in the Offering Memorandum or in the condition, financial or
otherwise, earnings or business affairs of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the Placement Agent shall have
received a certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting officer of the
Company, dated as of the Closing Time, certifying in such capacity
that (i) there has been no such material adverse change, (ii) the
representations and warranties in Section 1 hereof are true and
correct with the same force and effect as though expressly made at and
as of the Closing Time, and (iii) the Company has complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time.
(d) Accountant's Comfort Letter. At the time of the
execution of this Agreement, the Placement Agent shall have received
from each of Deloitte & Touche LLP and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇., CPA, a
letter dated such date, in form and substance satisfactory to the
Placement Agent, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to Placement
Agent with respect to the financial statements and certain financial
information contained in the Offering Memorandum.
(e) Bring-down Comfort Letter. At each Closing Time, the
Placement Agent shall have received from Deloitte & Touche LLP and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇., CPA, a letter, dated as of such Closing Time,
to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the
specified date referred to shall be a date not more than three
business days prior to such Closing Time.
(f) Restriction on Sale of Securities. At the time of
the execution of this Agreement, the Placement Agent shall have
received from each director of the Company referred to under the
caption "Management" in the Offering Memorandum and each record and
beneficial owner of Common Stock referred to under the caption
"Principal Shareholders" in the Offering Memorandum a letter agreement
addressed to the Placement Agent to the effect that, during a period
of 180 days from the date of the Offering Memorandum, such person will
not, directly or indirectly, (i) sell, offer or agree to sell, grant
any option for the sale of, or otherwise dispose of, any securities
that are substantially similar to the Notes or Common Stock or that
are convertible into or exchangeable for, or otherwise represent a
right to acquire, any such securities, except with prior written
consent of the Placement Agent, or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequences of ownership
of any Notes or Common Stock, whether any such swap transaction is to
be settled by delivery of securities, in cash or otherwise;
provided, however, that this Section 5(f) shall be subject to the
following exceptions: (x) the exercise of outstanding options granted
by the Company or pursuant to any options granted or to be granted
pursuant to any employee or non-employee
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director stock option plans (but not the sale, distribution, pledge,
hypothecation or other disposition of shares of Common Stock received
upon exercise of any such option), (y) if such person is a
partnership, transfers of shares of Common Stock by such person or any
affiliated partner or to any partner of such person, provided that
such transferee shall agree in writing to continue to be bound by the
terms of such letter agreement and (z) transfers of shares of Common
Stock disposed of as bona fide gifts, provided that the donee shall
agree in writing to continue to be bound by the terms of such letter
agreement.
(g) PORTAL. At the First Closing Time, the Securities
shall have been designated for trading on PORTAL.
(h) Additional Documents. At the First Closing Time, the
Placement Agent shall have been furnished with the Registration Rights
Agreement executed by the Company, and at each Closing Time, counsel
for the Placement Agent shall have been furnished with such documents
and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of
the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
in connection with the issuance and sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to
the Placement Agent and counsel for the Placement Agent.
(i) Termination of Agreement. If any condition specified
in this Section 5 shall not have been fulfilled when and as required to
be fulfilled, this Agreement may be terminated by the Placement Agent
by notice to the Company at any time at or prior to any Closing Time,
and such termination shall be without liability of any party to any
other party except as provided in Section 4 and except that Sections
1, 7 and 8 shall survive any such termination and remain in full force
and effect.
SECTION 6.
Subsequent Offers and Resales of the Securities.
(a) Offer and Sale Procedures. The Placement Agent and the
Company hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
(i) Offers and Sales only to Institutional Accredited
Investors or Qualified Institutional Buyers. Unless the Placement
Agent otherwise consents thereto, offers and sales of the Securities
will be made only through the Placement Agent (or Affiliates thereof),
as agent for the Company and not as principal. Each such offer or
sale shall only be made (A) to persons whom the offeror or seller
reasonably believes to be "qualified institutional buyers" within the
meaning Rule 144A under the 1933 Act (each such person, a "Qualified
Institutional Buyer") or (B) to a limited number of other
institutional "accredited investors" (as such term is defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D) that the offeror or seller
reasonably believes to be and, with respect to sales and deliveries,
that are accredited investors ("Institutional Accredited Investors").
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(ii) No General Solicitation. The Securities will be
offered by approaching prospective Purchasers on an individual basis.
No general solicitation or general advertising (within the meaning of
Rule 502(c) under the 1933 Act) will be used in the United States in
connection with the offering of the Securities.
(iii) Purchases by Non-Bank Fiduciaries. In the case of a
non-bank Purchaser of a Security acting as a fiduciary for one or more
third parties, in connection with an offer and sale to such Purchaser
pursuant to clause (i) above, each third party shall, in the judgment
of the Placement Agent, be an Institutional Accredited Investor or a
Qualified Institutional Buyer.
(iv) Purchaser Notification. The Placement Agent will
take reasonable steps to inform, and cause each of its Affiliates to
take reasonable steps to inform, persons acquiring the Securities in
the United States that the Securities (A) have not been registered
under the 1933 Act, (B) are being sold to them without registration
under the 1933 Act in accordance with an exemption from registration
under the 1933 Act and (C) except in the case that the Securities are
registered under the 1933 Act pursuant to the Registration Rights
Agreement, may not be offered, sold or otherwise transferred except
(1) to the Company, (2) inside the United States in accordance with
Rule 144A to a person whom the seller reasonably believes is a
Qualified Institutional Buyer that is purchasing such Securities for
its own account or for the account of a Qualified Institutional Buyer
to whom notice is given that the offer, sale or transfer is being made
in reliance on Rule 144A or (3) an exemption from registration under
the 1933 Act (including the exemption provided by Rule 144), if
available.
(v) Minimum Principal Amount. No sale of the Securities
to any one Purchaser who is an Institutional Accredited Investor, but
not a Qualified Institutional Buyer, will involve less than $100,000
principal amount of Notes.
(vi) Restrictions on Transfer. The transfer restrictions
and the other provisions set forth in Section 2.7 of the Indenture,
including the legend required thereby, shall apply to the Securities
except as otherwise agreed by the Company and the Placement Agent.
Following the solicitation of purchases of the Securities pursuant to
the terms hereof, the Placement Agent shall not be liable or
responsible to the Company for any losses, damages or liabilities
suffered or incurred by the Company, including any losses, damages or
liabilities under the 1933 Act, arising from or relating to any resale
or transfer of any Security.
(vii) Delivery of Offering Memorandum. The Placement Agent
will deliver to each Purchaser of the Notes solicited by it hereunder
a copy of the Offering Memorandum, as amended and supplemented at the
date of such delivery.
(viii) Reliance. The Placement Agent understands that the
Company and, for purposes of the opinions to be delivered pursuant to
Sections 5(a) and 5(b) hereof, counsel, will rely upon the accuracy
and truth of the representations and covenants contained in this
Section 6(a), and the Placement Agent consents to such reliance.
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(b) Covenants of the Company. The Company covenants with the
Placement Agent as follows:
(i) Due Diligence. The Company agrees that, prior to any
solicitation of any purchase of the Notes by the Placement Agent, the
Placement Agent and counsel for the Placement Agent shall have the
right to make reasonable inquiries into the business of the Company
and its subsidiaries. The Company also agrees to provide answers to
each prospective Purchaser of Securities who so requests concerning
the Company and its subsidiaries (to the extent that such information
is available or can be acquired and made available to prospective
Purchasers without unreasonable effort or expense and to the extent
the provision thereof is not prohibited by applicable law) and the
terms and conditions of the offering of the Securities, as provided in
the Offering Memorandum.
(ii) Integration. The Company agrees that it will not and
will cause its Affiliates not to make any offer or sale of securities
of the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the 1933 Act, such offer
or sale would render invalid (for the purpose of (i) the sale of the
Securities by the Company to the Purchasers or (ii) the resale of the
Securities by such Purchasers to others) the exemption from the
registration requirements of the 1933 Act provided by Section 4(1) or
4(2) thereof or by Rule 144A.
(iii) Rule 144A Information. The Company agrees that, in
order to render the Securities eligible for resale pursuant to Rule
144A under the 1933 Act, while any of the Securities remain
outstanding, it will make available, upon request, to any holder of
Securities or prospective purchasers of Securities the information
specified in Rule 144A(d)(4), unless the Company furnishes information
to the Commission pursuant to Section 13 or 15(d) of the 1934 Act
(such information, whether made available to holders or prospective
purchasers or furnished to the Commission, is herein referred to as
"Additional Information"). All Additional Information will not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading.
(iv) Restriction on Repurchases. Until the expiration of
two years after the latest Closing Time, the Company will not, and
will cause its Affiliates not to, purchase or agree to purchase or
otherwise acquire any Securities which are "restricted securities" (as
such term is defined under Rule 144(a)(3) under the 1933 Act), whether
as beneficial owner or otherwise (except as agent acting as a
securities broker on behalf of and for the account of customers in the
ordinary course of business in unsolicited broker's transactions)
unless, immediately upon any such purchase, the Company or such
Affiliate shall submit such Securities to the Trustee for
cancellation.
SECTION 7. Indemnification.
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(a) Indemnification of Placement Agent. The Company agrees to
indemnify and hold harmless the Placement Agent and each person, if any, who
controls the Placement Agent within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Offering Memorandum or the Final Offering Memorandum
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 7(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Placement Agent), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, to the extent that any
such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made (i) in
reliance upon and in conformity with written information relating to the
Placement Agent furnished to the Company by the Placement Agent expressly for
use in the Offering Memorandum (or any amendment thereto) or (ii) in the
Preliminary Offering Memorandum if a copy of the Offering Memorandum (as then
amended or supplemented) was not sent or given by or on behalf of such
Placement Agent to the person asserting any such loss, liability, claim, damage
or expense, if required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Securities, and the Offering Memorandum
(as then amended or supplemented) would have corrected such untrue statement or
omission.
(b) Indemnification of Company, Directors and Officers. The
Placement Agent agrees to indemnify and hold harmless the Company, its
directors, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Offering Memorandum in reliance upon and in conformity with written information
relating to the
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Placement Agent furnished to the Company by the Placement Agent expressly for
use in the Offering Memorandum.
(c) Actions against Parties; Notification. Each indemnified party
shall give notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it
is not materially prejudiced as a result thereof and in any event shall not
relieve it from any liability which it may have otherwise than on account of
this indemnity agreement. In the case of indemnification pursuant to Section
7(a) above, the indemnifying parties shall select counsel which shall be
reasonably acceptable to the Placement Agent, and, in the case of
indemnification pursuant to Section 7(b) above, the indemnifying parties shall
select counsel which shall be reasonably acceptable to the Company. An
indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall
not (except with the consent of the indemnified party) also be counsel to the
indemnified party. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
in respect of which indemnification or contribution could be sought under this
Section 7 or Section 8 hereof (whether or not the indemnified parties are
actual or potential parties thereto), unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim.
(d) Settlement without Consent if Failure to Reimburse. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided, however, that an indemnifying party
shall not be liable for any such settlement effected without its consent if
such indemnifying party (x) reimburses such indemnified party in accordance
with such request to the extent it considers such request to be reasonable and
(y) provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement.
SECTION 8. Contribution. If the indemnification provided for in
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and
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expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Placement Agent on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company on the one hand and
of the Placement Agent on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Placement Agent on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses and after
deducting the placement fee received by the Placement Agent) to the Company
bears to the total placement fee received by the Placement Agent pursuant to
Section 2(a) hereof.
The relative fault of the Company on the one hand and the Placement
Agent on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Placement Agent and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Placement Agent agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 8.
The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 8 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 8, the Placement Agent
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities placed by it exceeds the amount of any
damages which the Placement Agent has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8, each person, if any, who controls the
Placement Agent within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as the Placement
Agent, and each director of the Company and each
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person, if any, who controls the Company within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Company.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Placement Agent or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
Securities to the Placement Agent.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Placement Agent may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing
Time (i) if there has been, since the time of execution of this Agreement or
since the respective dates as of which information is given in the Offering
Memorandum, any material adverse change in the business prospects of the
Company as described in the Offering Memorandum or in the condition, financial
or otherwise, earnings or business affairs of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any material adverse change in the
financial markets in the United States or the international financial markets,
any outbreak of hostilities or escalation thereof or other calamity or crisis
or any change or development involving a prospective change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the judgment of the Placement Agent,
impracticable to market the Securities or to enforce contracts for the sale of
the Securities, or (iii) if trading in any securities of the Company has been
suspended or limited by the Commission or the American Stock Exchange, or if
trading generally on the New York Stock Exchange or the American Stock Exchange
or in the Nasdaq National Market System has been suspended or limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the National Association of Securities Dealers, Inc.
or any other governmental authority, or (iv) if a banking moratorium has been
declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section 10, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Placement Agent shall be directed to the Placement Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, attention of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; notices to the
Company shall be directed to it at ▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇
▇▇▇▇▇, attention of the President.
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SECTION 12. Parties. This Agreement shall each inure to the benefit
of and be binding upon the Placement Agent and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Placement Agent and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 7 and 8
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the Placement Agent and
the Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No Purchaser shall be deemed
to be a successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 14. Effect of Headings. The Article and Section headings
herein are for convenience only and shall not affect the construction hereof.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Placement Agent and the Company in accordance with its
terms.
Very truly yours,
CONTINUCARE CORPORATION
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: C.E.O.
CONFIRMED AND ACCEPTED,
as of the date first above written:
LOEWENBAUM & CO. INCORPORATED
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------------------
Authorized Signatory
Managing Director